Life Insurance 101

How Does Life Insurance Work?

Life insurance is a contract between an individual and an insurer.  The individual pays a premium and the insurer agrees to pay a tax-free, lump-sum amount to your beneficiary(ies) upon your death. 

The cost of the premium depends on the type of policy, amount of death benefit, and personal factors like age, gender, smoking status, and overall health.  Generally, prior to the issuance of the policy, the insured must have a simple health exam.  Policies that require underwriting are usually less expensive as compared to those that offer guaranteed insurability.

How Much Life Insurance Do You Need?

When you start to decide what amount of coverage you might need, consider these factors:


Amount needed to resolve any debts (including mortgage and expenses of last illness)


Final expenses and taxes


Amount to cover your family’s lifestyle expenses


Education for your children or grandchildren